Help Protect Your Business From The Long Term Effects of Corona Virus
Understand the 4 stages of Corona, protect your business, read 2 new survival strategies that fund advertising with your stock not your cash. Increase your sales, cash flow and survive.
The Corona Virus is set to change our lives at least for the near future. For most of us we are now entering uncharted waters and we harbour valid concerns about the impact of Corona for our family, friends, customers and businesses. Good information can provide us with some comfort and help us protect our friends, family and business. against Corona.
Some believe the Corona Virus is in fact two epidemics, the health of the global population and the health of the global economy. There isn’t much I can do about the health of the global population but there are strategies to help ease the impact of an economic pandemic.
This blog considers the impact of Corona virus on your business and offers a way to immunise against it. Furthermore, you will see that by taking new information and applying action, you too can take measures to reduce the effect a Corona driven recession may have on your business.
Our political leaders around the world are not the only ones who are being called upon to create change. Business leaders at every level are critically looking at how they operate and ways they can survive the duration of the crisis and the anticipated recovery.
We have arrived at this moment of forecast crisis and are seriously focused on what we must do to proceed in ways that protect our customers, our staff our business and our future. We may be thinking along the following lines:
- “What can I do? Much of this is out of my control? Sure, I can cut some costs, but will that be enough?”
- “Interest rates are low. Therefore, it should be a great time to borrow. However, will the banks lend me the money because my sales are low and they say I can’t afford the repayments”.
- “Things may be looking up. The UK government promised £30 billion to fight the impact of Corona. That should go a long way to resolving the issue, shouldn’t it?”
- “How does all this economic turmoil really affect me and my business?”
- “What can I do today?”
The next few months will be critical for our businesses. The actions we take now may determine the final result for our businesses, survival or not.
In recent times, there has been a rapid increase in the number of online platforms diverting cash from local businesses to themselves. The rapid decline of the high street is a well know and reported problem.
The impact of Corona isolation, although necessary, will only make matters worse. Panic buying has seen supermarket shelves stripped of food, forced closing of restaurants, cafés and bars will take even more money out of the community. People are becoming reluctant to leave their homes.
Some people will reduce their spending and tighten their belts just in case their employers business doesn’t survive and can’t continue to pay wages. People will be very careful about spending their savings. Tourist will stop coming due to flight restrictions and spending concerns.
Money circulating in the local economy has a multiplier effect, especially when spent in a small local economy. Whilst the pounds stay in the local economy, they can circulate several times, being passed from business to employee to another business in a very short space of time.
Four Stages of Business Illness. Do you have a business survival strategy to protect your business from Corona?
The current crisis will have a number of stages and each stage will present itself with different set of problems.
Stage 1 Initial reaction phase: Symptoms include, some staff is ill, confusion, misinformation and fast actions taken.
This is a stage of rapid “by the seat of your pants” adjustment, some employees will become sick, self-isolate and work from home, others will have reduced hours or no work at all. Businesses will decrease non critical spending, accept inefficiencies and better employ technology. Cost cutting will include travel costs, advertising costs, expansion investment and research and development investment. Inventory will be run down to the bare minimum. The bottom line is income will dramatically drop for many businesses and people. The negative loop is one businesses outgoing is another businesses or employees income.
Stage2 Stabilisation phase: Symptoms include staff being sick and remaining at home but unproductive, non-essential expenses suspended, concern about future, significantly decreased sales and cash-flow, frustration with speed of recovery, massively diminished capital resources, disillusionment.
This stage is perhaps the most critical. Without light at the end of the tunnel motivation and enthusiasm will suffer and when the light appears the question will rise, is it daylight we see or an oncoming train. Business owners will need to start thinking about the next steps. Cash-flow and capital will be at an all-time low. Staff morale and attitude to the recent cut in hours has left them dejected and complacent. Similar to the Apollo 13 space craft needing power to restart the command module the business owner will be looking at capital resources and wondering is there enough to restart the business.
Stage 3 Recovery phase: Symptoms include positive media about the decline of Corona cases, new cases are in decline, staff who became ill are now recovering, sales still at an all-time low, business operating at the bottom of its overdraft.
This stage is where the business owner needs to show true grit, strong leadership and convince everyone that there is a recovery plan. Cash is the most valued resource and one that can’t be squandered. Until sales pick up and the cash-flow tap starts running every penny counts and must pay its way. Under the right leadership, innovation and creativity will be seen as a way to recover. Opportunity to gain market share has never been better, those with cash may conquer as fortune favours the brave.
Stage 4 Opportunity phase: Symptoms include strong driven leadership, motivated staff and openness to ideas, weak competitors, available cash/capital resources, clear thinking, decisive action and guts.
This stage is where the business takes advantage of the situation; it uses its resources wisely and does what other fear to do. Now is the time to be aggressive in the market. Be confident about the future and tell everyone you are open for business. Cutting more costs is not the way forward. It’s time to ramp up the sales and marketing again.
Cash may have been King, but right now Barter may be a Smarter way to protect your business and your cash flow very soon
There are ways to leverage your position once the recovery phase has commenced. The age old system of barter will allow the businesses to leverage their inventory. Firstly you may buy advertising with your first line inventory by paying with gift cards and vouchers. The second way is to buy a % of you advertising with distressed inventory. Either way you significantly increase your media exposure without a significant increase in cash cost.
Buy advertising with your own gift cards and vouchers
Ask yourself this question:
“Would I prefer to pay for advertising with £10,000 of money from my bank account or issue £10,000 of gift card/vouchers to my business?”
If you pay by bank transfer then £10,000 of capital will leave your bank account with the hope that the advertising works. Alternatively, when you issue £10,000 of gift vouchers no money will leave your bank account. This provides an immediate return on investment as you are guaranteed £10,000 of customers when they redeem the vouchers. If the vouchers are not redeemed then you have the advertising for free. Either way you win.
Buy advertising with distressed inventory.
Ask yourself this question:
“Would I prefer to pay for advertising with £10,000 of money from my bank account or pay £8,000 from the bank plus £2,000 of distressed inventory?”
Again, if you pay by bank transfer then £10,000 of capital will leave your bank account with the hope that the advertising works. Alternatively, when you pay £8,000 from your bank account you immediately save £2,000 and by paying the remaining £2,000 with distressed inventory you avoid a write down on your balance sheet and eliminate a problem stock from your warehouse.
These are just two business survival strategies that business may adapt and protect themselves their capital and their cash flow in these difficult times. There are several different models for all types of businesses including retailers, manufacturers, professionals, accommodation, restaurants, car dealers, airlines and landlords.
Please feel free to contact us for further information.
How you gather, manage and use information will determine if you win or lose’– Bill Gates